Taxation and Venture Capital-Backed Entrepreneurship

Keuschnigg, Christian; Nielsen, Soren Bo

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Taxation and Venture Capital-Backed Entrepreneurship

33 Pages Posted: 9 Dec 2003

See all articles by Christian Keuschnigg

Christian Keuschnigg

University of St. Gallen – Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); Swiss Finance Institute

Soren Bo Nielsen

Copenhagen Business School - Department of Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

There are 2 versions of this paper

Date Written: October 2003

Abstract

In recent years, venture capital has increasingly become a factor in the financing of new firms. We examine how the value of mature firms determines the incentives of entrepreneurs to start up new firms and of venture capitalists to finance and advise them. We examine how capital gains taxes as well as subsidies to start-up costs of new firms affect venture capital-backed entrepreneurship. We also argue that dividend and capital gains taxes on mature firms have important consequences for start-up firms as well.

Keywords: Taxes, venture capital, entrepreneurship, double moral hazard

JEL Classification: D82, G24, H24, H25

Suggested Citation: Suggested Citation

Keuschnigg, Christian and Nielsen, Soren Bo, Taxation and Venture Capital-Backed Entrepreneurship (October 2003). Available at SSRN: https://ssrn.com/abstract=477483